Credit cards are a handy way to pay for things and also give you a way to earn points or get other perks as you spend. These don't come free, though: There are different fees and charges that can add up when left unchecked.
On the down side, several of these fees can be applied at once. For instance if you get a cash advance of $50, are late with your repayment and purchase an item in foreign currency all in the same month, you'll be slugged with multiple fees. The good news is that you can avoid most credit card fees with a little careful management. Here are the most common fees and how to avoid them.
1. Annual fees
The majority of credit cards charge an annual fee, ranging from $20 to $700+.
A standard credit card with few extra features usually has a fee of $50-$150.
A credit card with a lot of features and benefits, such as a rewards program or complimentary travel insurance, generally comes with a higher annual fee of $200-$400.
Annual fees on business credit cards can go even higher, from $400 and up.
Annual fees usually start when you first activate a card, and are charged on the anniversary of that date every year you have the card.
If you take advantage of credit card perks, the value they offer in things like free insurance and airport lounge offers could outweigh the cost of the annual fee. If not, consider a card with a lower fee or one that charges no annual fee.
How to avoid it: Some cards waive this fee in the first year to entice you to sign up for the card. You may also qualify for an annual fee-free credit card if you take out a home loan with an eligible package.
Alex pays an annual fee of $199 for her platinum rewards credit card. She earns 1 point per $1 spent and spends about $12,000 per year, which is enough points to get a $100 gift card. This means Alex pays $99 more for the card than what she gets in benefits. By switching to a no annual fee rewards credit card, like the Qantas American Express Discovery or Coles No Annual Fee Mastercard, Alex can save between $99 and $199 and still get rewards.
* This is a fictional, but realistic, example.
2. Interest
While not technically a fee, credit card interest is the biggest cost you may be liable to pay. The amount you pay is based on a percentage of your balance that remains unpaid by the due date. It's a little complicated, but this percentage is represented by an annual rate (for example, 19.99% p.a.), but is calculated daily and charged monthly.
Depending on your card, you could have any or all of the following interest rates applied to your balance:
Purchase rate. The interest rate charged for new purchases. The Reserve Bank of Australia reports the average standard credit card interest rate is 20.07% p.a., but standard purchase rates can be 8.99% p.a. to 24.99% p.a. (variable).
Cash advance rate. The interest rate applied for cash advances, such as ATM withdrawals. It is usually between 19.99% p.a. and 25.99% p.a. (variable).
Balance transfer rate. The interest rate applied to any balance you have moved from an old card to the new or current card. If you get a balance transfer credit card, you will usually pay a low or 0% promotional rate for the introductory period. After that, a higher standard interest rate will apply for any remaining balance transfer debt you're still paying off.
Promotional interest rate. This interest rate is usually offered to new cardholders for a set period of time, such as the first 12 months. If you’re looking at getting a card with a promotional interest rate for purchases or balance transfers, make sure you also check the standard interest rate that kicks in afterwards.
How to avoid it: Most credit cards in Australia won't charge you interest if you pay your balance in full by the due date on your statement. If you don't pay the total balance in full by the due date, aim to pay more than the minimum each month or choose a card that has a low ongoing interest rate or a 0% promotional interest rate. These strategies will help you keep costs down, at least in the short term.
Example: Thien's interest savings
Thien's credit card has a $5,000 balance on an interest rate of 19.99% p.a. (variable). If he makes minimum payments each month, he'll pay around $955 in interest for the year. If Thien switches to a card with a lower interest rate of 12.99% p.a., he could save $354 in interest over the year. He could also avoid interest charges completely by transferring the debt to a 0% balance transfer card, and paying it off before the introductory period ends.
* This is a fictional, but realistic, example.
3. Balance transfer fees
Some balance transfer credit cards charge a fee for moving your existing debt from a current card to the new account.
Balance transfer fees get charged as soon as you transfer a balance and get added to the principal amount of the debt you transferred, not accruing interest until the introductory period expires.
Balance transfer fees (also known as balance transfer processing or administration charges) are usually between 1% and 3% of the total debt you move, which quickly adds up if you have thousands of dollars of debt.
For instance, if you transfer $5,000 of debt and the fee is 1%, you'll pay $50.
How to avoid it: Compare balance transfer credit cards and look for options that don’t charge a balance transfer fee.
Example: Move your debt and save like Miranda
Miranda has seen a balance transfer credit card that offers 0% interest for 12 months, with a 2.5% balance transfer fee. She has a $6,000 debt she wants to move, but a $150 transfer fee would be added to her balance with this new credit card. Instead of applying, Miranda compares a range of balance transfer options and finds a different card that charges no balance transfer fee. This means she can transfer her debt, save $150 on the fee and pay off her balance faster.
* This is a fictional, but realistic, example.
4. Foreign transaction fees
Most credit and debit cards apply a foreign transaction fee when you use your card overseas or when you shop online with an international merchant. This charge, also known as an “international transaction fee” or “currency conversion fee”, is usually between 1% and 3.5% of the total transaction.
How to avoid it: Look for a credit card that doesn’t apply a foreign transaction fee, such as the Latitude 28° Global Platinum Mastercard or any platinum Bankwest credit card. You could also consider a prepaid travel card that lets you load and use funds in several currencies, cash, traveller’s cheques or a combination of travel money options that can help reduce the fees you pay when you’re overseas or shopping online.
Example: How Jai saved on transaction fees on holiday
Jai has just got back from a trip to Brazil, where he spent $3,000 on his credit card. He checks his statement and sees that a 3% foreign transaction fee was applied each time he used the card, adding $90 to his total bill. While Jai has to pay the fees this time, he decides to shop around for a card with no foreign transaction fee so that he saves money on all his future trips.
* This is a fictional, but realistic, example.
5. Cash advance fees
This fee is charged for “cash advance” transactions, including when you withdraw money from an ATM, buy foreign currency or pay with plastic whilst gambling.
In these instances, you’ll be charged between 2% and 3.5% of the total transaction. Some cards also have a substantial minimum cash advance fee of between $20 and $35. You’ll also be charged the cash advance rate of interest from the day the transaction is made.
How to avoid it: Don’t use your credit card to get cash out. Avoid using it to buy foreign currency or for transactions in a casino. Also check with your credit card provider about other transactions where this fee applies and steer clear of them.
Example: Valentina's cash advance mistake
Valentina has run out of cash at a music festival. She can't access her everyday transaction account, so she withdraws $500 using her credit card. When she gets her next statement, she sees she has been charged a 3% fee worth $15. The cash advance interest rate of 21.99% p.a. has also been charged for 20 days, totalling $6, which means Valentina has paid $21 for using her credit card. She makes sure she takes cash next time.
* This is a fictional, but realistic, example.
6. Late payment fees
If you don’t make a payment on your credit card by the due date on your statement, you will be charged a late payment fee worth anywhere from $0 to $30. Some providers charge this straight away, while others may not apply a late fee unless they have to contact you to make a payment. Note that even if a late fee is not charged, other penalties could apply and it may affect your credit history.
How to avoid it: Set yourself a reminder to make payments before the due date on your statement. Make sure you factor in processing times by paying a day or 2 early if you can. You may even want to set up an automatic payment from your transaction account so you always meet this deadline.
Example: Asad uses reminders to avoid late fees
Asad has racked up a few late fees after forgetting to pay his balance on time, so he sets up a calendar reminder for the 10th of each month. His credit card is usually due around the 13th, so this gives him time to check his statement, pay the minimum or full balance due, and allow for processing time.
* This is a fictional, but realistic, example.
7. Over limit fees
You could be charged an “over limit fee” if you max out your credit card in a statement period. For instance, if your credit card limit is $2,000 and you go on a shopping spree and push the balance up to $2,200, then you've gone over your limit.
Not all credit card companies apply this charge, but if they do, it's usually between $5 and $35.
How to avoid it: Regularly check your credit card balance so that you know what your “available credit limit” is when using the card. If you regularly get close to going over the limit, consider requesting a credit limit increase.
Example: Marie shops up a storm
After a fun day of shopping with her friends, Marie realises she's charged $500 worth of purchases to her card, which will put it over the limit. She quickly transfers $300 from her savings to her credit card to avoid an over limit fee.
Some rewards credit cards charge an annual fee for choosing a particular rewards program. Usually this only applies to cards that give you a choice between standard rewards and Qantas rewards, such as the Citi Qantas Rewards program that you can opt into with a Citi Rewards card. This fee is usually between $30 and $50 and applies on top of the card’s annual fee.
How to avoid it: Carefully read the terms and conditions of any rewards program you’re considering. If a fee is charged for opting to earn Qantas rewards, make sure the value of points you will earn from the card will outweigh this cost (and the annual fee). You may also want to consider a Qantas frequent flyer card that doesn’t charge a reward program fee.
Example: How Antony got the most out of his rewards credit card
Antony opted to earn Qantas rewards on his current credit card, at a rate of 1 point per $1 spent. He pays an extra $30 per year for the program, and an annual fee of $200. He decides to switch to the NAB Qantas Rewards card, which has an annual fee of $95 and offers 0.5 points per $1 spent on a Visa and 1 point per $1 spent on an American Express card linked to the account. This saves him $135 a year, while also giving him the opportunity to earn just as many points.
* This is a fictional, but realistic, example.
Finder survey: What annual fee would people be willing to pay for a rewards credit card?
Response
Up to $100
40.13%
$0
34.48%
Up to $200
10.97%
Up to $300
7.21%
Up to $400
4.7%
Up to $500
1.57%
More than $500
0.94%
Source: Finder survey by Pure Profile of 1113 Australians, December 2023
9. Credit card surcharges
This fee is actually charged by businesses, rather than your credit card provider. Credit card surcharges are usually between 0.5% and 3% of the total transaction cost, but some merchants apply a flat fee that could be much higher. All merchants legally have to notify you of a surcharge before you make a payment.
How to avoid it: You can avoid this fee by having another payment option available, such as a debit card, cash, direct transfer or by using a service such as POLi or PayPal.
Example: How Doug avoided extra fees
Doug uses his credit card to pay his everyday expenses, then pays it off at the end of the month. He noticed that the surcharge he pays when he's in a cafe, restaurant or bar is often 1-2%. It's a small amount per transaction, but it all adds up. He starts using his debit card when eating out to avoid the unnecessary charges.
* This is a fictional, but realistic, example.
10. Extra cardholder fees
A supplementary card is an easy way to share your account with someone else and can double your opportunities to earn points. But if you want to allow someone else to use your credit card, such as your partner or child, you may be charged an additional cardholder fee.
Example: Leila and Lui share cards without the fees
Leila wanted to give her university-aged daughter Lui a credit card to use in emergencies. As Lui won't use the card very often, Leila wasn't keen to pay any extra fees for the convenience of an extra card. So, she shopped around and found a suitable card that offers free supplementary cardholders.
These credit card fees are less common, but it’s still good to know when they may apply and how you can avoid them.
Chargeback fee. If you need to reverse a credit card transaction through your credit card provider, you could be charged a fee of around $10–$25. You can avoid this fee by trying to get a refund with the merchant before going to your credit card provider.
Card replacement fees. Most credit card companies don’t charge a fee if you need a replacement card in Australia. But for fast-tracking or overseas replacements, you could pay anywhere from $30 to $200 for the service.
Paper statement fee. Some credit card companies will charge you a fee if you request paper statements for your account. Usually this will be around $2 to $7, but you can avoid it by opting for paperless statements delivered to your email or via Internet banking.
Non-bank ATM fee. If you use your credit card to withdraw cash or check your balance at an ATM outside of your credit card provider’s network, you could be charged a fee of up to $5. There may also be additional charges from the ATM operator, so avoid getting cash out and check your balance via Internet or mobile banking instead.
Amy Bradney-George was the senior writer for credit cards at Finder, and editorial lead for Finder Green. She has over 16 years of editorial experience and has been featured in publications including ABC News, Money Magazine and The Sydney Morning Herald.
Hi. I am interested to know if there is a limitation on how many times a Credit Card Company can charge a ‘late payment’ fee and/or a ‘missed payment’ fee during the course of one year? I have heard that they can only charge this fee once in a twelve month period, is this the case? Can I request the reversal of subsequent, repeat charges of these fees or am I mistakenly optimistic? Thanks for your expertise, its worth its weight in ‘credit card fees’.
Generally, a late payment fee (a late charge) is charged to a borrower who misses paying at least their minimum payment by the payment deadline.
Depending on your credit card’s late fee policy and whether it’s your first time being late in the past six months. You’ll be charged a late fee each month your payment is late or less than the minimum payment.
It would be best to check the terms and conditions of your credit card or contact your credit card issuer to clarify this matter.
I’ve recently switched credit card providers and was shocked when they charged me a cash advance fee for buying a lotto ticket online at tatts.com.au, and then interest on the cash advance fee! Their answer is that website is considered a gambling website and they will charge me extra fees for gambling online. I’ve never gambled, I always pay off my balance in full each month and never get charged any interest or extra fees until now. Can you recommend a credit card that wouldn’t charge me extra for buying a lotto ticket online? Thank you.
It depends on the provider as to whether the transaction is treated as a purchase or a cash advance. Some providers don’t allow these types of transactions at all.
Hope this has helped. Let us know if you have any further questions.
How likely would you be to recommend finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Important information about this website
finder.com.au is one of Australia's leading comparison websites. We are committed to our readers and stands by our editorial principles
We try to take an open and transparent approach and provide a broad-based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labeling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
We make money by featuring products on our site. Compensation received from the providers featured on our site can influence which products we write about as well as where and how products appear on our page, but the order or placement of these products does not influence our assessment or opinions of them, nor is it an endorsement or recommendation for them.
Products marked as 'Top Pick', 'Promoted' or 'Advertisement' are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment when you click on those buttons or apply for a product. You can learn more about how we make money.
When products are grouped in a table or list, the order in which they are initially sorted may be influenced by a range of factors including price, fees and discounts; commercial partnerships; product features; and brand popularity. We provide tools so you can sort and filter these lists to highlight features that matter to you.
Please read our website terms of use and privacy policy for more information about our services and our approach to privacy.
Alex pays an annual fee of $199 for her platinum rewards credit card. She earns 1 point per $1 spent and spends about $12,000 per year, which is enough points to get a $100 gift card. This means Alex pays $99 more for the card than what she gets in benefits. By switching to a no annual fee rewards credit card, like the Qantas American Express Discovery or Coles No Annual Fee Mastercard, Alex can save between $99 and $199 and still get rewards.
Thien's credit card has a $5,000 balance on an interest rate of 19.99% p.a. (variable). If he makes minimum payments each month, he'll pay around $955 in interest for the year. If Thien switches to a card with a lower interest rate of 12.99% p.a., he could save $354 in interest over the year. He could also avoid interest charges completely by transferring the debt to a 0% balance transfer card, and paying it off before the introductory period ends.
Miranda has seen a balance transfer credit card that offers 0% interest for 12 months, with a 2.5% balance transfer fee. She has a $6,000 debt she wants to move, but a $150 transfer fee would be added to her balance with this new credit card. Instead of applying, Miranda compares a range of balance transfer options and finds a different card that charges no balance transfer fee. This means she can transfer her debt, save $150 on the fee and pay off her balance faster.
Jai has just got back from a trip to Brazil, where he spent $3,000 on his credit card. He checks his statement and sees that a 3% foreign transaction fee was applied each time he used the card, adding $90 to his total bill. While Jai has to pay the fees this time, he decides to shop around for a card with no foreign transaction fee so that he saves money on all his future trips.
Valentina has run out of cash at a music festival. She can't access her everyday transaction account, so she withdraws $500 using her credit card. When she gets her next statement, she sees she has been charged a 3% fee worth $15. The cash advance interest rate of 21.99% p.a. has also been charged for 20 days, totalling $6, which means Valentina has paid $21 for using her credit card. She makes sure she takes cash next time.
Asad has racked up a few late fees after forgetting to pay his balance on time, so he sets up a calendar reminder for the 10th of each month. His credit card is usually due around the 13th, so this gives him time to check his statement, pay the minimum or full balance due, and allow for processing time.
After a fun day of shopping with her friends, Marie realises she's charged $500 worth of purchases to her card, which will put it over the limit. She quickly transfers $300 from her savings to her credit card to avoid an over limit fee.
Antony opted to earn Qantas rewards on his current credit card, at a rate of 1 point per $1 spent. He pays an extra $30 per year for the program, and an annual fee of $200. He decides to switch to the NAB Qantas Rewards card, which has an annual fee of $95 and offers 0.5 points per $1 spent on a Visa and 1 point per $1 spent on an American Express card linked to the account. This saves him $135 a year, while also giving him the opportunity to earn just as many points.
Leila wanted to give her university-aged daughter Lui a credit card to use in emergencies. As Lui won't use the card very often, Leila wasn't keen to pay any extra fees for the convenience of an extra card. So, she shopped around and found a suitable card that offers free supplementary cardholders.
Hi. I am interested to know if there is a limitation on how many times a Credit Card Company can charge a ‘late payment’ fee and/or a ‘missed payment’ fee during the course of one year? I have heard that they can only charge this fee once in a twelve month period, is this the case? Can I request the reversal of subsequent, repeat charges of these fees or am I mistakenly optimistic? Thanks for your expertise, its worth its weight in ‘credit card fees’.
Hi Spencer,
Thanks for your inquiry
Generally, a late payment fee (a late charge) is charged to a borrower who misses paying at least their minimum payment by the payment deadline.
Depending on your credit card’s late fee policy and whether it’s your first time being late in the past six months. You’ll be charged a late fee each month your payment is late or less than the minimum payment.
It would be best to check the terms and conditions of your credit card or contact your credit card issuer to clarify this matter.
Hope this information helps
Cheers,
Arnold
I’ve recently switched credit card providers and was shocked when they charged me a cash advance fee for buying a lotto ticket online at tatts.com.au, and then interest on the cash advance fee! Their answer is that website is considered a gambling website and they will charge me extra fees for gambling online. I’ve never gambled, I always pay off my balance in full each month and never get charged any interest or extra fees until now. Can you recommend a credit card that wouldn’t charge me extra for buying a lotto ticket online? Thank you.
Hi Leanne,
Thanks for your question.
We have a guide about gambling transactions and credit cards. You may want to check it out for an answer to your question.
It depends on the provider as to whether the transaction is treated as a purchase or a cash advance. Some providers don’t allow these types of transactions at all.
Hope this has helped. Let us know if you have any further questions.
I hope this helps.
Regards,
Jacob